e-Circular

FINANCIAL REPORTING AND TAXATION. Sl. No. : 71/2012 - 13 Circular No. : CFO/FRT-TAX/1/2012 - 13 Monday,April 23,2012. .

All the Branches /LHOs/SBUs/Offices/CC establishments of State Bank of India

20.04.2012 CC:FRT:TAX:52

Madam / Sirs, TDS AUTOMATION FUNCTIONALITY TDS ON INTEREST As per Income Tax Act, 1961, branches have to deduct TDS on interest on time deposits under section 194A and deposit the same to the government account. Presently, the TDS is deducted on time deposits by CBS and parked in the TDS-BGL account at the branches. Daily/monthly statements of TDS so deducted, available in the report folders, are verified by the branches, who transfer the amount to the Government account, through internet banking, on or before 7th of the following month (30th in case of April). 2. However, when any erroneous deduction of TDS is noticed by the branches,

the relative amounts are refunded to the depositors before the aforesaid dates through refund screen provided in the TDS functionality in the CBS. Afterwards, the branches have to input the remittance details (challans No, date, etc.) of tax deposited, into the system for generation of TDS returns, 26Q/27Q. 3. It is observed that many of the branches are not depositing the TDS amount

to the government account in time resulting into non compliance of statutory obligations by the Bank, which is a serious regulatory risk. 4. To resolve the problem, a new functionality for payment of TDS on Interest

has been developed, in the CBS, whereby the amount of TDS deducted gets credited to a new TDS-BGL account, from where the amount will be automatically transferred to the Government account through CINB platform.

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The salient features of the new functionality are as under:a) All branches are made live for this functionality. b) TDS deducted on Interest payment on time deposits (u/s 194A&195) will be credited to a new BGL from the day the branch is made live i.e. 01st April 2012. c) TDS deducted w.e.f. 01st April 2012, during each month will be automatically swept by the system and credited to government account through e-tax at the EOD of 6th of the following month (for the month of March at the EOD of 29th April). d) First such sweep shall be carried out on 6th May 2012. e) Once the amount is credited to government at the EOD of 6th, subsequent processes of inputting of challan number and other TDS remittance details will be carried out by the system and TDS return (Form 26Q/27Q) shall be generated, in respect of interest payments. (Before filing the Form 26Q/27Q with NSDL, the branches have to add the TDS deducted by them in respect of payments other than interest, as the CBS captures TDS on interest payments only) f) Challans could be viewed / downloaded by the Branches through INB branch interface on 8th of the following month for the tax deducted during previous month.

6.

All branches are to ensure that the TANs entered in the branch profile of

CBS are valid and do in fact pertain to them, as the system will deposit Tax to the government account against respective TANs of the branches. Auto sweep will fail for the branches that have not entered the TAN or if the TAN does not match with the TAN data available with the Income Tax department. In such a scenario, the branches have to deposit the tax to the government account manually by debiting the new TDS BGL A/c through internet banking (as was being done earlier). Lists of structurally invalid TANs have already been provided the circles. Please arrange to get the TAN data verified at the branches, so that the auto payment functionality of TDS does not fail on account of incorrect TAN. 7. Branches are also advised to review details of the TDS deducted and

credited to the new TDS-BGL account at regular intervals and to refund the amount of TDS, if wrongly deducted, to the depositor before the amount gets

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automatically to the govt account at the EOD of 6th of the following month (29th in case of April). It should be noted that once the TDS amount are transferred to the government account, it will be very difficult for the Bank to refund the amount to the customer. 8. Since the new TDS-BGL account has been opened for transactions effected

after 1St April, 2012, branches should note that any remittance/refund pertaining to the TDS deduction effected on or before 31st March 2012 should be made by debit to the old TDS-BGL account only.

Yours faithfully,

Chief General Manager (Financial Reporting & Taxation)

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